Pepsi Benches Its Drinks - Beverages Will Snap Long Streak by Sitting Out Super Bowl

By SUZANNE VRANICA Snapping a 23-year streak on the gridiron, PepsiCo ‘s beverages will sit out Super Bowl XLIV, as the soft-drink and snack giant puts its advertising muscle behind a new cause-related marketing program.

The move is an about-face for Pepsi, which was the biggest advertiser on last year’s broadcast of the big game and has long made the National Football League championship the centerpiece of its marketing strategy. Pepsi has used the event, TV’s priciest showcase for ads, to launch splashy spots starring celebrities such as Britney Spears, Cindy Crawford and Ozzy Osbourne.

“In 2010, each of our beverage brands has a strategy and marketing platform that will be less about a singular event,” says Frank Cooper, senior vice president of PepsiCo Americas Beverages. However, Doritos, a PepsiCo snack brand, will advertise during the game broadcast.

The decision leaves the field open for archrival Coca-Cola , which is putting the finishing touches on a Super Bowl ad that will feature the Simpsons, according to a person familiar with the matter. Coke jumped back into Super Bowl advertising in 2007, after an eight-year hiatus, and has given Pepsi some tough competition in generating Super Bowl buzz.

To implement its new strategy, Pepsi, based in Purchase, N.Y., will plunge into the crowded field of cause-related marketing in coming weeks with a campaign to kick off “Pepsi Refresh Project.” Under the program, Pepsi will award grant money for community projects proposed and selected by consumers, such as helping high-school students publish books to develop their writing skills. Pepsi says it has earmarked $20 million of its ad dollars for the grants next year.

The company is hoping the new campaign will help reinvigorate sales of some of its top North American beverage brands. Pepsi’s namesake brand saw its volume decline 7.3% from a year earlier in the first nine months of 2009, steeper than the 2.3% drop in volume for the soft-drink industry overall, according to Beverage Digest, an industry publication and data service. Coke’s volume was down 6.6% over the same period.

Pepsi declined to disclose the new campaign’s total cost or the Pepsi brand’s 2010 ad budget, saying only that it will be about the same as last year’s. The company spent $74.6 million on Pepsi ads in 2008, according to TNS Media Intelligence, an ad-tracking service owned by WPP.

Pepsi says it will spend 60% more on online ads in 2010 than it did this year. It will be relying largely on Web ads and public relations to market its Pepsi brand because, it says, that’s the best way to reach younger audiences— Pepsi’s primary target—and to keep consumers involved with its brand. Ads will carry the new slogan, “Every Pepsi Refreshes the World.” Some of the TV ads will appear in February.

“You can’t just go to market with a TV ad anymore,” says Lee Clow, chief creative officer of Omnicom Group ‘s TBWA Worldwide, the agency behind the new campaign. Mr. Clow was one of the creators of Apple’s landmark “1984” Super Bowl commercial, which introduced the Macintosh personal computer.

Pepsi’s new tack is “not a condemnation of the Super Bowl,” says its Mr. Cooper. It would be too hard to explain Pepsi’s new marketing campaign in a 30-second TV spot, he adds.

Marketers and media buyers say that thanks to the many polls that rate and rank Super Bowl commercials nowadays, some advertisers have become leery of placing their spots in the game.

Pepsi isn’t the only advertiser taking a break from the Super Bowl. FedEx , a longtime Super Bowl advertiser, is opting out of the 2010 game. While Pepsi says cost wasn’t a factor in its decision—some 30-second spots on the Super Bowl broadcast are fetching nearly $3 million—a spokeswoman for FedEx said her company was motivated by “cost containment.”

Nonetheless, CBS says it is nearly sold out of ad time for the Feb 7 match-up.

Indeed, media buyers say the Super Bowl is still a must buy for many companies because of its huge audience. This year, 98.7 million viewers tuned in to see the Pittsburgh Steelers defeat the Arizona Cardinals.

The lineup of advertisers for next year’s game includes brewer Anheuser-Busch InBev, car maker Hyundai Motor, auto site, Diamond Foods ‘ Pop Secret popcorn and job-search site

Pepsi’s break from the big game does carry a risk, branding experts say, because consumers have come to expect entertaining ads from the company.

“It’s a bit of a gamble to walk away from such an iconic event that has been such a big and critical part of their marketing program,” says Tim Calkins, a marketing professor at Northwestern University’s Kellogg School of Management in Evanston, Ill. “I think there could be a bit of backlash.”

Pepsi, which began its Super Bowl advertising in 1987, says it weighed the risk. “Brands should not blindly anchor themselves to history,” Mr. Cooper says.

Write to Suzanne Vranica at